Saturday, November 12, 2011
10:42:42 PM EDT

Industrial Components and Grocery

by
James Brown

In addition to tonight's new candidates readers may want to consider the following symbols:

BCR - a breakout past resistance at $90.00 could be a bullish entry point.

FFIV - this stock is showing strength. The breakout past $110 could signal a rally toward the $118-120 zone.

NKE - Friday's rally is a breakout from the short-term two-week trend of lower highs.

TSCO - A rally past the $75.00 level could be a bullish entry point.

- James

FYI:

Speculation on Oil?
Iran's nuclear weapon program has been making headlines. There has been an increase of saber-rattling from both Iran and Israel. Most people do not think Israel would unilaterally attack Iran in an attempt to stop them from completing their nuclear warhead development. However, Israel does have a history of strategically bombing crucial weapon sites in neighboring nations. If there is military action from Israel or the West against Iran then Iran has threatened to shut down the Straits of Hormuz, which handles about 33% of the global oil tanker traffic. Oil prices would skyrocket should this occur.

We are contemplating a long-term, deep out-of-the money call position on the U.S. Oil ETF (USO) just in case something does happen. Oil could surge to $150, $200 a barrel or more if Iran tries to shut down the Straits of Hormuz. Just headlines of an attack by Israel would send oil screaming higher. Yet at the moment the USO looks extremely overbought with a nearly non-stop rally from its October lows.

Why We Like It:
PH is an industrial component maker. Shares have been churning sideways in the $80-85 zone for over two weeks. The stock currently looks poised to breakout from this trading range and make a run at the $90 level or its July highs near $91.80.

I am suggesting we use a trigger at $85.25 to open bullish positions with a stop at $81.45. More conservative traders will want to consider a higher stop loss. Our target is $89.75. More aggressive trades could aim higher (91.50 or the $97-99 zone).

FYI: The Point & Figure chart for PH is currently bearish but a breakout past $85.00 would create a brand new quadruple-top breakout buy signal.

Trigger @ $85.25

- Suggested Positions -

buy the DEC $90 call (PH1117L90) current ask $1.60

- or -

buy the JAN $90 call (PH1221A90) current ask $3.20

Annotated Chart:

Entry on November xx at $ xx.xx
Earnings Date 01/19/12 (unconfirmed)
Average Daily Volume = 2.6 million
Listed on November 12, 2011

Why We Like It:
WFM is a high-end grocery chain. The stock has been underperforming the last several days as investors sold the earnings news. The company beat by a penny but revenues were light. Now it appears the correction is over. Shares are bouncing from their 100-dma and trendline of higher lows.

WFM can be a very volatile stock so trading options on it is a higher-risk trade. We want to keep our position size small. I am suggesting a trigger at $69.65 to open bullish positions with a stop loss at $67.40 (a tight stop for this stock). Our target is $74.00. More aggressive traders could aim higher.

Trigger @ $69.65

- Suggested Positions -

buy the DEC $70 call (WFM1117L70) current ask $2.50

- or -

buy the JAN $75 call (WFM1221A75) current ask $1.93

Annotated Chart:

Entry on November xx at $ xx.xx
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on November 12, 2011